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Consultant: Louisville being left behind in competition for more air service

Consultant: Louisville being left behind in competition for more air service

Four years ago, United added a flight from Indianapolis to San Francisco because of an incentive fund. | Courtesy of United Airlines

This post has been updated.

Without an incentive to dangle in front of airlines, Louisville will continue to miss out on the chance to expand the number of nonstop flights out of Louisville International Airport, according to Luke Schmidt, a consultant with Louisville firm L.B. Schmidt & Associates.

“That is how you play this game. It is no different than the state going after Toyota,” he told the Rotary Club of Louisville Thursday.

Schmidt is working with the nonprofit Louisville Regional Airlift Development (LRAD) to raise at least $4 million for an incentive fund aimed at enticing airlines to bring nonstop flights to Louisville.

So far, LRAD has raised “several million,” he said, and it still has more than $1 million left to raise to meet its goal. The state gave LRAD $1.33 million, and the city chipped in $200,000. The Louisville Convention & Visitors Bureau committed to contribute $200,000 to the fund as well on the condition that the nonprofit secure nonstop service to Los Angeles and Boston. Schmidt declined to name other contributors.

The money will be used to guarantee that an airline makes a minimum amount of revenue on a new flight for a period of a year or two. If an airline expects to make a $1 million a month on a flight, for example, but only earns $800,000, then the incentive fund would pay out $200,000 to cover the difference.

“It is intended to show the community is willing to share the initial risk” of offering a new flight route, Schmidt said.

This chart shows how a minimum revenue guarantee could work. | Courtesy of LRAD

LRAD leaders will start meeting with airlines in January of next year to attempt to broker an agreement with an airline to offer a nonstop flight from Louisville to one of four priority cities: Los Angeles, Boston, San Francisco or Seattle.

In addition to offering the incentive fund, Schmidt said he and LRAD leaders have been collecting promises from companies and organizations that they will support a new nonstop flight by buying airline tickets, as well as collecting demographic and travel data to entice airlines.

Schmidt says Louisville is being left behind in terms of number of nonstop flights domestically and internationally. Louisville has 27 nonstop flight destinations and 72 daily nonstop departures. By comparison, Indianapolis has 44 nonstop destinations and 143 daily departures. Nashville and Cincinnati have even more.

Having an incentive fund is critical to attracting new nonstop flights, which will in turn help economic development efforts and population growth, he said, later adding that a nonstop flight to Boston, for instance, could result in a multimillion-dollar impact for the region.

Other cities have offered such funds to airlines and successfully attracted new flights to their airports; however, as Insider previously reported, some cities have had more success than others when it comes to retaining the flight once the incentive goes away.

Louisville International Airport already has made strides by adding a number of nonstop flights through discount airline Allegiant, but those flights focus on the leisure traveler. They are offered only a couple of times a week and at off-peak times.

“From the business traveler perspective, it doesn’t fill the need,” Schmidt said.

Should LRAD attract flights to its four priority cities, he said, it would then turn its attention to getting nonstop flights to New Orleans, Raleigh, Kansas City and San Diego.

LRAD is overseen by a 20-person board of directors that is made up of business, government and civic leaders. It’s led by chairman emeritus David Jones Sr., chairman Koleman Karleski, vice chairman Ed Glasscock, secretary Sandra Frazier and treasurer Michael Mountjoy.

Louisville native Caitlin Bowling has covered the local restaurant and retail scene since 2014. After graduating from the Ohio University’s E.W. Scripps School of Journalism, Caitlin got her start at a newspaper in the mountains of North Carolina where she won multiple state awards for her reporting. Since returning to Louisville, she’s written for Business First and Insider Louisville, winning awards for health and business reporting and becoming a go-to source for business news. In addition to restaurants and retail business, Caitlin covers real estate, economic development and tourism. Email Caitlin at [email protected]